What’s the Volatility of Mining Stocks in May 2017?
Mining stock technicals
There are a few technical indicators we have to consider when analyzing the performance of mining stocks. The direction that these technical numbers follow can be useful in determining potential price changes in an asset. We’ll look at 14-day RSI (relative strength index) scores and implied volatility in this article.
Interested in AEM? Don't miss the next report.
Receive e-mail alerts for new research on AEM
The iShares Gold Trust (IAU) and the iShares Silver Trust (SLV) have risen 1.4% and 4.1%, respectively, on a five-day-trailing basis. Most of the time, the volatility of mining funds is higher than that of metal-based funds.
The fall during the past few months negatively affected mining stocks and funds. However, the last week was good, as most miners saw a revival.
Call implied volatility takes into account the changes in an asset’s price due to variations in the price of its call option. During times of global and economic turbulence, volatility typically rises.
On May 16, 2017, the implied volatilities of Royal Gold (RGLD), Coeur Mining (CDE), Agnico Eagle (AEM), and IAMGOLD (IAG) stood at 27.2%, 49.4%, 30.8%, and 44.7%, respectively. Mining companies’ volatilities are often higher than precious metals’ volatilities.
A 14-day RSI score above 70 suggests that a stock price may fall, whereas a score below 30 suggests that a stock price may rise. The RSI levels of the four mining giants mentioned above have all increased due to their higher stock prices.
Royal Gold, Coeur Mining, Agnico Eagle, and IAMGOLD have RSI scores of 71.4, 60, 64.1, and 58.2, respectively. These RSI scores have recovered along with the respective companies’ stock prices.
For ongoing updates on this industry, keep checking in with Market Realist’s Metals and Mining page.